Springfield casino could be delayed a year

MGM blames highway project; cost to state could be $125m

STATE HOUSE NEWS SERVICE

A DELAY IN A SPRINGFIELD HIGHWAY PROJECT could push back the opening of MGM Springfield by a year, leading to an estimated $125 million in foregone state revenue and tens of millions of dollars in additional costs for MGM.

MGM Springfield President Michael Mathis on Thursday asked the state Gaming Commission to incorporate the Springfield viaduct construction project timetable delay into the casino project’s timetable. It’s unfortunate, he said, but preferable to holding an opening while on-ramps to the nearby highway are closed.

“We just want to make sure that we open as well as you can. It goes back to the adage, you only have one chance to make a first impression,” Mathis told the commission on Thursday.

The new schedule, which was endorsed by the City of Springfield, would push back the planned opening from late 2017 to September 2018, or soon after the viaduct’s construction. Springfield would be compensated by MGM for the delay, including $1 million for public safety.

Mathis said MGM expects to generate $125 million in annual revenues for the state, which Gaming Commission Chair Stephen Crosby said is based on about $500 million in gross gaming revenues.

“They’ve been talking about the fall of 2017 for a long time,” Crosby told reporters during a break in the commission’s meeting at the Boston Convention and Exhibition Center.

Crosby said the commission would research the issue, but he is inclined to approve the timeframe if the viaduct project delay caused the change.

“These things happen all the time,” Crosby told reporters. “If it is as they say, I think we are disinclined to penalize them for problems that aren’t of their making.”

Mike Verseckes, a spokesman for the Massachusetts Department of Transportation, said the project was delayed six months because the design was being finalized and there was concern in the local construction industry about the capacity to take on the work.

Crosby and Mathis both told reporters that the casino project was envisioned in tandem with the highway work on the viaduct.

“It’s always been an article of faith that the viaduct completion would coordinate with the opening of this project. We’ve been talking about this for years,” Crosby said.

A Massachusetts Department of Transportation presentation said work on rehabbing the raised highway went out to bid in September 2014 and the notice to proceed was scheduled for April 2015.

Mathis said MGM learned that the project might be delayed late last year.

Crosby said, “Even though it’s going to cost the Commonwealth real money, but we’re playing a long game, here. We’re not playing a short game, and we want a fabulously successfully project for the 15 years of the license, and if it costs a little money in the short-term that’s OK.”

MGM’s host community agreement with Springfield required completion of construction by August 2017 and the beginning of operations by February 2018 at the latest.

Mathis said some construction is ongoing and a delay would allow the development to be built “smarter and maybe less fast-track,” though the delay would also cause the company “tens of millions” for carrying interest, a licensing fee and additional operating costs.

The foregone revenue would be “significant,” Mathis said.

The 2011 gambling law that legalized casinos sets out a fine of up to $50 million if a licensee acting in “bad faith” fails to open within a year of the date specified in a construction timeline.